ANNUAL INFORMATION FORM – XEBEC ADSORPTION INC. – For ...

applicable regulatory authorities. In addition, certain types of operations, including exploration
and development projects and significant changes to certain existing projects, may require the
submission and approval of environmental impact assessments. Compliance with Environmental
Legislation can require significant expenditures and failure to comply with Environmental
Legislation may result in the imposition of fines, penalties and liability for cleanup costs and
damages. Changes in Environmental Legislation due to, namely, climate change concerns, may
require, among other things, reductions in emissions to the air from Xebec’s existing and target
customers’ operations and result in increased capital expenditures. Future changes in
Environmental Legislation could occur and result in stricter standards and enforcement, larger
fines and liability, and increased capital expenditures and operating costs, which could have a
material adverse effect on Xebec’s existing and target customers’ ability to purchase Xebec’s
products.
6. DIVIDENDS
To date, the Company has not paid any dividends on its shares. The future payment of
dividends will be dependent on the financial requirements to fund future growth, and other factors
which the Board of Directors may consider appropriate in the circumstances. As it is anticipated that
all available cash will be needed to implement the Company’s business plan and growth, there are no
intentions to pay dividends in the foreseeable future.
7. CAPITAL STRUCTURE
The share capital of the Company consists of an unlimited number of common shares
(“Common Shares”) without par value and an unlimited number of preferred shares (“Preferred
Shares”) without par value.
As at December 31, 2010, 39,363,867 Common Shares, and no Preferred Shares are
issued and outstanding. In addition, the Company had 5,834,249, Common Shares issued, but not
outstanding, held in escrow that will be cancelled as the performance targets were not achieved,
107,361 options outstanding to purchase Common Shares (“Options”) and 15,456,424 share
purchase warrants outstanding as at December 31, 2010 (“Share Purchase Warrants”).
The Common Shares, Preferred Shares, Share Purchase Warrants and Options have the
following material rights, privileges, restrictions and conditions:
Common Shares
Holders of Common Shares are entitled to one vote for each share on all matters to be voted
on by shareholders (except matters requiring the vote of another specified class or series voting
separately as a class or series). Holders of Common Shares will be entitled to receive such dividends,
if any, as may be declared on the Common Shares by the Company’s Board of Directors. On
liquidation, dissolution or winding up of the Company, the holders of Common Shares will be
entitled to receive the property of the Company remaining after payment of all outstanding debts and
after payment of all amounts required to be paid on all issued and outstanding Preferred Shares as
provided for in each series of Preferred Shares, including return of capital. The holders of the
Common Shares have no pre-emptive, redemption or conversion rights. All Common Shares, when
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